Assa Abloy stock falls following mixed quarterly results

Investing.com -- Shares of Assa Abloy AB (OTC:ASAZY) (STO:ASSAB) declined by 2.8% as the company reported mixed results in its latest earnings release. While revenue was slightly ahead of consensus, with a 1% increase to SEK 39.6 billion compared to the expected SEK 39.2 billion, the organic growth remained flat. The performance varied significantly across regions and divisions, impacting investor sentiment.

In the earnings breakdown, the Europe, Middle East, India, and Africa (EMEIA) division reported a flat organic development, falling short of the anticipated 1% growth. Performance was mixed within the region, with Central Europe and the Middle East/Africa/India experiencing growth, while South Europe and the UK/Ireland saw declines.

In the Americas, a modest 2% organic growth was observed, which was below the 3% projected by analysts. Although Latin America and North America’s non-residential sectors showed strong growth, the North America residential sector experienced a downturn.

The Asia Pacific division presented a notable organic decline of 11%, doubling the anticipated 5% decrease. While South Korea showed robust growth, significant declines in China and South-East Asia weighed heavily on the division’s performance.

The Global Technologies division achieved a 5% organic growth, just shy of the 6% expected, with notable successes in Physical Access Control and Global Solutions, but other business areas within the HID segment underperformed. Entrance Systems also recorded a 2% organic decline, meeting expectations, with downturns in the Residential and Industrial segments.

Adjusted EBIT (earnings before interest and taxes) was slightly better than consensus, reaching SEK 6,529 million, 2% above the expected SEK 6,378 million. Global Technologies and Entrance Systems divisions exceeded expectations, while EMEIA was on par. However, the Americas and Asia Pacific divisions did not meet forecasts, missing by 6% and 8%, respectively.

The adjusted EBIT margin stood at 16.5%, a slight improvement over the 16.3% consensus. Operating cash flow showed a positive trend, coming in at SEK 8,010 million compared to SEK 7,315 million in the same quarter of the previous year.

As for shareholder returns, management has proposed a dividend of SEK 5.90 per share, slightly above the consensus estimate of SEK 5.81 per share.

Despite the revenue surpassing consensus and a proposed dividend exceeding expectations, the mixed performance across various divisions and regions, particularly the significant decline in the Asia Pacific market, has led to a decline in Assa Abloy (ST:ASSAb)’s stock price in the current trading session.

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